Financial Analysis: Owens Corning (NYSE:OC) vs. Installed Building Products (NYSE:IBP)

Installed Building Products (NYSE:IBP) and Owens Corning (NYSE:OC) are both mid-cap construction companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.

Dividends

Installed Building Products pays an annual dividend of $1.48 per share and has a dividend yield of 0.6%. Owens Corning pays an annual dividend of $2.76 per share and has a dividend yield of 2.4%. Installed Building Products pays out 15.9% of its earnings in the form of a dividend. Owens Corning pays out -48.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Owens Corning has increased its dividend for 10 consecutive years. Owens Corning is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Installed Building Products and Owens Corning, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Installed Building Products	2	9	2	1	2.14
Owens Corning	2	5	10	0	2.47

Installed Building Products presently has a consensus target price of $226.20, suggesting a potential downside of 15.16%. Owens Corning has a consensus target price of $155.58, suggesting a potential upside of 37.84%. Given Owens Corning’s stronger consensus rating and higher probable upside, analysts clearly believe Owens Corning is more favorable than Installed Building Products.

Risk & Volatility

Installed Building Products has a beta of 1.9, suggesting that its stock price is 90% more volatile than the S&P 500. Comparatively, Owens Corning has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Profitability

This table compares Installed Building Products and Owens Corning’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Installed Building Products	8.60%	62.74%	14.23%
Owens Corning	-4.46%	24.42%	8.53%

Institutional & Insider Ownership

99.6% of Installed Building Products shares are held by institutional investors. Comparatively, 88.4% of Owens Corning shares are held by institutional investors. 16.2% of Installed Building Products shares are held by insiders. Comparatively, 0.8% of Owens Corning shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Installed Building Products and Owens Corning”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Installed Building Products	$2.94 billion	2.46	$256.60 million	$9.29	28.70
Owens Corning	$10.98 billion	0.85	$647.00 million	($5.72)	-19.73

Owens Corning has higher revenue and earnings than Installed Building Products. Owens Corning is trading at a lower price-to-earnings ratio than Installed Building Products, indicating that it is currently the more affordable of the two stocks.

Summary

Installed Building Products beats Owens Corning on 10 of the 18 factors compared between the two stocks.

About Installed Building Products

Installed Building Products, Inc., together with its subsidiaries, engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products in the United States. It operates through Installation, Distribution, and Manufacturing operation segments. The company offers a range of insulation materials, such as fiberglass and cellulose, and spray foam insulation materials. It is also involved in the installation of insulation and sealant materials in various areas of a structure, which includes basement and crawl space, building envelope, attic, and acoustical applications. In addition, the company installs a range of caulk and sealant products that control air infiltration in residential and commercial buildings; and waterproofing options, including sheet and hot applied waterproofing membranes, as well as deck coating, bentonite, and air and vapor systems. Further, it distributes spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation, as well as accessories and equipment used in the insulation installation process; and manufactures cellulose insulation and specialty industrial fibers. It serves homebuilders, multi-family and commercial and agricultural construction firms, individual homeowners, and repair and remodeling contractors. The company was formerly known as CCIB Holdco, Inc. Installed Building Products, Inc. was founded in 1977 and is based in Columbus, Ohio.

About Owens Corning

Owens Corning manufactures and sells building and construction materials in the United States, Europe, the Asia Pacific, and internationally. It operates in three segments: Roofing, Insulation, and Composites. The Roofing segment manufactures and sells laminate and strip asphalt roofing shingles, oxidized asphalt materials, and roofing components used in residential and commercial construction, and specialty applications. This segment sells its products through distributors, home centers, and lumberyards, as well as to roofing contractors for built-up roofing asphalt systems; and manufacturers in automotive, chemical, rubber, and construction industries. The Insulation segment manufactures and sells thermal and acoustical batts, loosefill insulation, spray foam insulation, foam sheathing and accessories under the Owens Corning PINK, and FIBERGLAS brands; and glass fiber pipe insulation, energy efficient flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation, and foam insulation under the FOAMULAR, FOAMGLAS, and Paroc brand names used in construction applications. This segment sells its products primarily to the insulation installers, home centers, lumberyards, retailers, and distributors. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and glass fiber products in the form of fabrics, non-wovens, and composite lumber. Its products are used in building structures, roofing shingles, tubs and showers, pools, decking, flooring, pipes and tanks, poles, electrical equipment, and wind-energy turbine blades. This segment sells its products directly to parts molders, fabricators, and shingle manufacturers. The company was incorporated in 1938 and is headquartered in Toledo, Ohio.